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Here’s What Happened:
In 2005, Productos Avicolas del Sur, Inc., (PAS) began selling breaded chicken. PAS used a composite trademark containing the words POLLO PICU combined with a cartoon chicken. Then PAS ran into financial trouble. PAS neglected to file declarations of continued use. So the USPTO cancelled the registration.
In 2011, PAS’s bank froze its financing and PAS stopped selling its breaded chicken. PAS and its bank entered into a settlement agreement. PAS agreed to let the bank foreclose on its assets if it defaults on the settlement payments. After PAS defaulted on the payments, the bank did not foreclose. PAS obtained a court order deeming PAS’s assets to be free and clear of obligations to the bank.
In 2016, another breaded chicken manufacturer, To-Ricos, began selling chicken using the word mark, POLLO PICU. To-Ricos filed an intent to use application for the mark. At the time, there were no other live registrations or pending applications so the USPTO issued a notice of allowance.
Later in 2016, PAS filed a new use based application for the mark and entered into a license agreement with an import/export company.
To-Ricos brought a declaratory judgment action alleging that PAS has no interest in the trademark due to abandonment after non-use for more than three years.
In response to To-Ricos’ motion for summary judgment, PAS had two main arguments against abandonment.
First, PAS argued that the abandonment was due to circumstances beyond its control, namely the lengthy battle with its bank. The district court rejected the argument. The litigation with the bank did not prohibit PAS from filing declarations to maintain the registration.
Second, PAS argued that it can show an intent to resume use which would get past the three years of nonuse automatic abandonment. The evidence was sparse. PAS tried to sell the mark but it didn’t go through. The bank didn’t foreclose on the trademark but that has nothing to do with PAS’s intent to resume use. The last piece of evidence was a naked license that PAS had with a third party. But that license was dated long after PAS had already abandoned the mark. There was no evidence of business plans, marketing strategies, licensing efforts, or other actions undertaken between 2011 and 2016 to establish an intent to resume use of the mark in commerce.
The district court granted summary judgment to To-Ricos and it was affirmed on appeal.
WHY YOU SHOULD KNOW THIS: Since trademark ownership depends on use, one has to use it or lose it. However, the USPTO understands that sometimes things happen and there’s an interruption in use of a trademark. For example, during the pandemic, some businesses had to shut down and temporarily cease using their trademarks. If the business was coming up against a deadline to file declarations of continued use, the business could request to be excused from non-use as long as they could show an intent to resume use once the pandemic was over. Unfortunately, PAS didn’t have an outside force that prevented it from protecting its trademark.
Cited Authority: To-Ricos, Ltd. v. Productos Avicolas del Sur, Inc., No. CV 19-1592 (JAG), 2022 WL 19355737, at *1 (D.P.R. Sept. 22, 2022), aff'd, No. 22-1853, 2024 WL 4234502 (1st Cir. Sept. 19, 2024),